Case Summary

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Case SuS=mmary

The case involves evaluation of the application made by Mr Schwartz to direct the company Babybelle. Mr. Schwartz is unqualified to direct any company based on the section 260G(2) of h 2001, after being previously convicted with five charges that could have attracted a jail penalty of more than three months. The applicant evidence shows that Mr. Schwartz has been managing the company for a while against the law. It also shows that Mr. Schwartz repaid the penalty. According to the ruling, Mr. Schwartz can only be allowed to direct the company without a condition. However, the provided evidence does not give enough information to do so and thus the leave is dismissed.

The Facts of the Case

Mr. Schwarts on 14th of April 2015 pleaded guilty to getting Centrelink Youth Allowance funds that he was not eligible for in 31st July 2001 to 31st December 2001 period. Mr. Schwartz had in this period commended to casual employment and stopped studying, but failed to report the change of the condition to Centrelink. Schwartz had also under-declared his wages to receive more than he was entitled from the youth payment.

Mr. Schwartz was convicted under section 206B(1)(b)(ii) of the Corporation Act from managing corporation. The act provides for spontaneous disqualification of the offender from managing corporation, for being dishonesty. The offense is also punishable by at least three months of imprisonment. Based on the case ruling, Mr. Schwartz was not to manage any corporation until 14th April 2010 which is five years from the conviction date based on 206B(2)(a) of the Corporation Act. Nevertheless if Mr. Schwartz found the need to manage any corporation he was allowed to make a court application under section 206G(1)(c) of the Act.

Major Legal Issues

They major issues is whether Mr. Schwartz is eligible of managing the Babybelle under section 206G(1)(c) of the Corporation Act. The other issue is whether the involved of Mr. Schwartz in the company management will affect other company’s stakeholder who includes customers and shareholders.

Relevant Law Relied on by the Judge in Making their Decision

The laws used to make the judgment in this case include the Corporation Act and legal principle Lindgren J in Adams v Australian Securities and Investments Commission (2003) 46 ACSR 68.

The Actual Decision of the Case

Based on the two legal considerations, the complainant bears the burden of establishing that the court needs to make the prohibition exception. The act main objective is to safeguard the public but and to discourage others from being involved in similar behaviours and abusing the structure of the corporation to stakeholders disadvantage but not to punish the offender. Permission will therefore never be granted based on sole consideration of offenders’ perspective. The court denied Mr. Schwartz the applied leave.

According to the court, complainant can only be given the authority to manage the company with a condition. However, the complainant did not present enough evidence to help the judge give a condition. Although the company owner Mr. Goodman expresses his confidence with Mr. Schwartz, the company operations also affect other stakeholders who include customers and investors who the court must protect. In this regard, the court denied Mr. Schwartz the leave to manage the corporation. Nevertheless, Mr. Schwartz leave request could be reconsidered with enough evidence of his ability regarding what the company does. Thus Mr. Schwartz should consider reapplying but with all the needed evidence. This include more information on his relation with Mr. Goodman, the role of Mr. Goodman in controlling the business, whether the shareholding of Mr. Goodman is to be retained and more information on the current Babybelle’s operations and its business partners.

Observation

The ruling of the case was fair enough. Although it was true that Mr. Schwartz was young when he was involved in dishonesty offense, however his legal term of being denied the right to manage any corporation was not over. Thus he had to apply for a leave from the court. The court decision was right, the legal term given by Corporation Act to be isolated from corporate management help in molding offenders and protecting the public. Mr. Schwartz was still under that punishment and this could have only changed after convincing the court that the public rights and safety was not at stake. The court observed the law by considering the public more than an individual